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Archive for March 2017

How to Use Your Self-managed Super Fund to Invest in Property

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The words self-managed super funds (SMSF) and property investment in the same sentence may bring cold shivers to some people, but with sound financial advice and doing your homework, you can use your SMSF to purchase an investment property.

There are rules you have to follow though, and here are just some of the considerations you’ll need to think about:

The Loan

SMSFs are what is known as limited recourse loans. This mean, in case of default, the bank can access the investment property and any other property securing the loan.

If your SMSF doesn’t have the assets to purchase a property outright, you can still borrow money from a lender, but there are ratios to consider. Also, you should be aware, SMSF property loans can to be more costly than other types of property loans, so this will need to be factored into your budget.

Purchasing Residential Property

Residential property is very often the first purchase of choice for many investors, but when you’re using your SMSFs, the residential property must be for the sole purpose of supporting the SMSFs investment strategy in building wealth for retirement. Therefore, you can’t live in it (unless you’re receiving pension from the fund and the property has been transferred to you), neither can any of the SMSF members or trustees, or any relatives can’t benefit from the property.

You should be aware too, you can’t use your funds to purchase property from a member or trustee of the fund (such as between family).

Purchasing Commercial Property

You may want to use your funds to purchase a commercial property. Many business owners do this, with their business leasing the property from the fund paying the full rental market rates.

This is a nice win win situation, with your business paying off your SMSF’s loan in the form of rent, and your business claiming the rent as a tax deductible benefit.

New Developments

SMSF properties must be on a single title, so buying off the plan is allowed with an SMSF, but you can’t buy the land to develop or subdivide.

What About Renovations?

While you may find a property which is a ‘renovator’s dream’, you can only repair and maintain a property. You cannot alter the property until the SMSF property loan is paid off and alterations to a property cannot be made if they change the character of the property.

What Else do I Need to Know?

Any tax losses from the property cannot be offset against your taxable income outside the fund.  Also, loan repayments must be made from your SMSF which means your fund must always have sufficient liquidity or cash flow to meet the loan repayments.

For more information about SMSF and property investment check out the Government website

As always, we recommend you speak to a financial expert in this area so you can properly consider all the rules and regulations, and any risk involved.

We’re always looking at ways in which to help you get the best out of your property investment. With over 40 years in real estate and property management, our talented team is constantly looking for new and innovative ways to ensure your property investment experience is exceptional. This is why we are one of Newcastle’s longest established property management companies, so give us a call on 02 4954 8833 or pop into our office for a chat.


Archive for March 2017

When is the Best Time to Sell?

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When is the best time to put a property on the market is a question we frequently get asked. Some say spring is the best time to sell because the garden looks its best, the weather is good and people are looking to buy a property so they can move in before Christmas.

Others say autumn; the rush of Christmas is over, the weather is still good and the garden is still looking presentable.

However, if everyone is putting their property on the market at these times, competition will be high as buyers will have more properties to choose from.

Selling out of the traditional season does have its advantages – there are less properties on the market so competition is down, and there are ways to make your property look great even if the weather is bad!

The fact is, in many cases, you can’t plan when to sell anyway and it’s circumstances dictating the situation. For instance, you may suddenly get a job offer interstate or need to release some cash from your investment property.

The truth of the matter is, there is no right or wrong time to sell, the most important thing is to have the right strategy.

Here are a few points to consider:

Presenting the Property

Look at how you’re presenting the property and which type of buyers you’re wanting to attract – investors or homeowners? Some people choose to use a professional photographer to take the photos for adverts and others use the services of a professional interior designer for open inspections.

Realistic Expectations

Price is something people always need to be realistic about. Look at what other similar properties in the area are selling for and speak to an agent so you can get a good feel for how the market is behaving.

The reasons for selling may also affect the price. For instance, if you want a quick sale, or you haven’t done any essential maintenance, you may have to be prepared to go for a lower price.

The Marketing Mix

If no-one knows your property is for sale, it’s not going to sell. You need to market the property and there are costs to consider associated with this.

Ensuring your property is listed online or in the local newspaper, the description is inviting and the pictures are good will all help sell your property.

How to Sell

Different properties in different areas suit different ways of selling. For some properties a private treaty works best while for others, you may get the best price by going to auction. Other methods of sale include sales by expressions of interest (EOI) and sale by tender.

Get an Agent

A good agent will help you every step of the way. It’s their job and they’ve got the experience! Furthermore, many will have a database of people looking for a particular type of property they can market too. We’ve actually sold properties simply by sending a property out to our database which has saved the seller marketing costs.

Want to know some more property selling top tips? We’re here to help!

Our knowledgeable and experienced team will help take the stress out of selling, make sure you avoid costly mistakes and will guide you through every step of the process. We’ve got the experience to help you get the best out of your property and will work with you to help you to get you the best price. With over 40 years of business in the area, we are one of Newcastle’s longest established real estate offices, so give us a call on 02 4954 8833 or pop into our office for a chat.